VAT returns – it is just a push of a button?

Xero does it all for me, why do I need to pay an accountant to submit the return?

We have all seen the adverts for bookkeeping software, and they promise to be able to deliver hassle-free bookkeeping and make VAT & payroll simple. I hate to break it to you – it is not true, and it does make me wince every time.

The phrase “If you think it’s expensive to hire a professional – wait until you hire an amateur!” comes to mind.

You can, of course, yes, just press the button, and you may get away with it for a while, but there is no check of the data submitted. If we are honest, how many business owners understand the VAT rules & secondly understand Xero. Would you spot an error?

The risk of an HMRC investigation is increased further if your accountant makes lots of changes to your year-end data ( changes which possibly don’t find their way into xero). Resulting in the four submitted returns presenting a  different picture of the business to HMRC than the accounts submitted. Not to mention we have Making Tax Digital (MTD) for corporation tax & income tax coming in the next few years and the quarterly returns will become even more important that they are correct when submitted.

The inconvenient truth & fundamental problem is that VAT, and Payroll are not simple areas, there are lots of moving parts, and no amount of fancy software can make it so!

When you push that blue button – how can you be sure you have recorded all the sales and claimed correctly the VAT you have paid without someone checking?

The software isn’t going to tell you that you forgot to claim your mileage last month or your bank reconciliation is out, or you coded the sales invoices to NO VAT in error. You could be making lots of little errors that are costing you money and creating needless stress.

I help train clients to do the basics of their own bookkeeping, but I always encourage clients to outsource VAT and Payroll because I believe the quarter data check of an accountant is worth its weight in gold and Payroll is so expensive and potentially damaging to your team’s morale if you get it wrong.

When I prepare a VAT return for a client, I am not just clicking a blue button to submit it.

We are also running through a series of checks and double-checks

–         Reminding them of the deadline; (easy to forget when you are busy)

–         Reminders to ensure the liability is paid on time;

–         Review to see if the bank feed has issues? Are there, duplications or bits missing?

–         Review debtors and creditors for anything odd;

–         Does the VAT return agree to the running balance (trial balance) ( often it doesn’t)

–         Are you better off on the cash or accrual VAT schemes this quarter?

–         Are the VAT postings consistent both for VAT treatment or coding?

–         Has NO VAT been used on items that should be on the return?

–         A general sense check of the numbers and investigation if anything looks odd.

We will do a general tidy-up in Xero and create loom videos containing any feedback the client might need to know, including Xero training.

We often put a rough corporation tax estimate into the accounts to give the owner an idea of the potential liability so they can save the tax during the year. As a result, we reduce the risk of painful year-end corporation Tax surprises.

The check allows another touchpoint in the year for the client and turns a once-a-year interaction into an ongoing relationship.

The fees for our VAT review service offer great value, and essentially, it helps you ensure that your Xero data and business is on track.

If you would like to find out more about our VAT review service, please, get in touch.

Please note: This is not meant to constitute professional advice. It is generic guidance only –please seek specific advice for your circumstances